Why Thailand's Economy Has Joined Japan in Seeing Signs of Recovery but America Still in Recession

According to MCOT.net, Thailand's Fiscal Policy Office (FPO) announced this month that there are definite signs Thailand's economy is beginning to recover from recession. In the second quarter of 2009, Thailand had a 2.3% growth rate, exports were up as orders from overseas increased, and production levels increased too. Thailand hasn't been in recession as long as the US, so this sign that the recession in Thailand is already ending is welcome news for Thailand and Thais. Beset with bad news for the last year - unstable political situation, bombs in the south, the closing of Suvarnabhumi airport, the arrest of westerners for lese majeste - all of these have impacted tourism in Thailand and stopped tourists coming here. Now, with the economy looking like it might turn the corner, Thais are already becoming optimistic, as was evident when I shopped at several Bangkok mega-malls this week. But, if the US is still deep in recession, why has Thailand already begun to improve?

Thailand Does Not Have the Debt America Does - First and foremost, like the Chinese and Japanese, Thais are a nationality of savers. They don't believe in spending money they don't have (although the use of credit cards is definitely increasing) and many Thais have substantial amounts of money in savings. So, when the economy shrinks, they might not spent as much to begin with but as the recession progresses, unlike Americans, Thais do still have disposable income and eventually they begin to spend again. America, because the vast majority of Americans are in debt, just doesn't have the economic ability to recover quickly. Americans don't have money, so how can they spend it to help stimulate the economy?

Shrinking Credit Doesn't Affect Thailand as Much as It Affects the USA - As Thais pay for most purchases with cash (large and small purchases), when access to credit begins to dry up, it's not really going to affect most Thais. Americans, on the other hand, rely almost solely on credit and, when they can't get it, it puts a severe damper on America's abiliity to recover from recession as people don't have the cash and they don't have access to the credit either.

Thailand's Farm Income Has Increased , American Farms are Barely Holding On - 60% of Thais are farmers (subsistence farmers mostly) and this year has seen an increase in production on many farms as well as an increase in the prices farm produce is going for. This puts a little more money in the pockets of farm owners and allows them to buy items they might not otherwise buy. American farmers are still dealing with high food prices and government over-subsidy to ever go back to the good old days of American farming.

The Thai Goverment Has Managed To Control Political Instability, America's Honeymoon With Obama Now Over - The relatively new government of Prime MInister Abhisit has managed to keep somewhat control of a very unstable political situation. Things in Thailand are still unstable (supporters of exiled Prime Minister Thaksin Shinawatra plan on new protest rallies this weekend), but overall, because of the government putting into effect emergency measures to prevent the protesters from being disruptive, this has gone a long way to calming the political situation down. American, on the other hand, after a bried honeymoon with Obama is now starting to look less sure about the new guy in the White House, which is likely to have a negative effect on the US economy.

Tourists Beginning to Return to Thailand but Stay Away from America - Thailand has always been one of the world's top destinations for tourism. Last year, because of political instability and because anti-government protesters closed down Suvarnabhumi airport for two weeks, tourists stopped coming to Thailand. In the last couple of months, even though the tourist industry in Thailand is still in crisis, things do look a little better. Just being in Bangkok, I see more westerners here now than only a few months ago, which is usually a signal that others will soon return. Plus, as Americans start to return to Thailand, that's yet more money going into Thai coffers and less money into American ones. Tourists too are staying away from America, since more and more stringent regulations have been put into place after 9/11.

Overall, it looks likely that Thailand's economy will continue to emerge out of recession over the next two quarters, with the Thai government expecting full recovery by the beginning of 2010. Investment in Thailand is something many investors are considering as, in the long run, it stands to be a much better investment prospect than the US, where the recession is likely to continue for much longer.